No tax exemption to JVs/AoPs having a non-resident partner

KARACHI: The Federal Board of Revenue (FBR) has notified that the income of Joint Ventures (JVs)/Association of Persons (AoP) in which one partner is a non-resident company, is neither exempt from tax nor the tax is adjustable.
Field formations have been directed to undertake corrective measures where exemption certificates or refunds have been issued and particulars of all such cases may also be forwarded to the FBR.
It has been brought to the notice of FBR that the taxation of non-resident AOPs/JVs has been meted out different treatments across jurisdictions on the basis of Circular No.4 of 1964 and Circular No.8 of 1986 and other instructions issued by the FBR from time to time.
The matter has been reconsidered and it has been decided that the income of JVs under all circumstances is to be assessed in the capacity of an AoP as per clear provisions of Section 92 of the Income Tax Ordinance, 2001 and the income of the AoP per se is liable to tax and the tax deducted under clause (a) and (b) of section 153 of the Ordinance on receipt of Pakistan source income of AoP is final discharge of tax liability as per section 169 of the Ordinance.
Therefore no exemption certificate under section 153 of the Ordinance should be issued on the plea that the income of JVs/AoPs is either exempt from tax or tax is adjustable.
Besides, all instructions issued on the subject till now including Circular No.4 of 1964 and Circular No.8 of 1986 stand rescinded.

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